During the 2022-2023 interest rate hike cycle, many income-oriented investors turned to certificates of deposit and Treasury bonds for higher returns. However, as interest rates fall, investor focus is shifting back to high-quality blue-chip dividend stocks. At this juncture, blindly chasing high yields is not advisable; instead, investors should select companies with wide moats, stable earnings, and reasonable payout ratios. AT&T (T) and Vici Properties (VICI) are outstanding representatives that meet these criteria.
In recent years, AT&T decisively abandoned its strategy of building a media empire by divesting media assets such as DirecTV and WarnerMedia. These moves have simplified its business structure, allowing it to concentrate more resources on developing high-growth 5G wireless and fiber networks, while also providing flexibility to reduce debt.
Its core business shows strong growth momentum. Wireless postpaid services, as the primary growth engine, added 1.7 million, 1.7 million, and 725,000 net subscribers in 2023, 2024, and the first half of 2025, respectively. During the same period, the fiber business also performed well, adding 1.1 million, 1.0 million, and 504,000 connections, respectively. The steady growth of these two businesses has effectively offset the decline in its traditional business wireline segment.
Regarding cash flow, AT&T’s free cash flow grew by 18% to $16.8 billion in 2023 and increased a further 5% to $17.6 billion in 2024. Although free cash flow is expected to retreat to the mid-to-low range of $16.0 billion in 2025 due to increased investment in 5G and fiber, facing a higher tax rate, and completing the divestiture of the remaining stake in DirecTV, its ability to cover dividends remains solid. Dividend payouts were $8.1 billion and $8.2 billion in 2023 and 2024, respectively, and the current forward dividend yield stands at 4.3%, still above the 4% yield of the 10-year U.S. Treasury note. Analysts forecast that its adjusted EBITDA will grow at a compound annual growth rate of 3% from 2024 to 2027. Considering its current valuation of less than 7 times adjusted EBITDA, these characteristics of low valuation and high yield are expected to provide an effective buffer during market downturns.
Vici Properties is a real estate investment trust focused on experiential properties, owning 93 entertainment properties, including casinos and resorts, across the United States and Canada. As a REIT, its business model involves acquiring properties and leasing them long-term, while distributing at least 90% of its taxable income as dividends to shareholders, thereby maintaining favorable tax treatment.
Vici’s tenants include industry giants such as Caesars Entertainment (CZR) and MGM Resorts International (MGM). Its leases possess two key advantages: first, the lease terms span decades and are linked to the Consumer Price Index (CPI), providing an effective hedge against inflation; second, the gaming industry is heavily regulated and involves high operating costs, making it extremely difficult for tenants to relocate. Because of this, Vici has maintained a remarkable 100% occupancy rate since its IPO in 2018, which is particularly notable in the REIT industry.
The company expects its 2025 Adjusted Funds From Operations per share to grow by 4%-6% to $2.35-$2.37, which is sufficient to comfortably cover the anticipated dividend of $1.73 per share. Based on this calculation, its forward dividend yield is as high as 5.8%, and it has consistently increased its dividend since its initial public offering. The current stock price of $31 corresponds to about 13 times this year’s AFFO, making the valuation quite attractive.
